RNS Number:4125R
Celsis International PLC
29 October 2003
CELSIS INTERNATIONAL PLC
Interim Results for 6 months to 30 September 2003
A period of robust performance
Celsis International plc ("Celsis"), is a world leading manufacturer of rapid
diagnostic systems used to detect and measure microbial contamination for many
of the world's leading pharmaceutical, personal care, beverage and dairy
companies (the Product Group). The Company is also a leading US supplier of
cGMP analytical services for the pharmaceutical industry (the Laboratory Group).
Financial Highlights:
* Profit before tax up 21.6% to $2.14 million (H1 2002: $1.76 million) on
turnover up 6.3% to $13.48 million (H1 2002: $12.68 million) taking into
account the discontinuation of Laboratory Group toxicology unit
* Product Group revenues up 17.8% to $6.70 million (H1 2002: $5.69
million)
* Earning per share up 56.7% to 2.6c (H1 2002: 1.6c)
* Gross margins improve to 64.4% (H1 2002: 61.1%)
* Significant increase in net operating cash inflow to $3.29 million (H1
2002: $1.62 million). Cash in hand: $11.4 million (H1 2002: $3.8 million)
Operational Highlights:
* New Adenlyate Kinase (AK) technology being implemented globally by two
additional customers, Procter & Gamble and Johnson & Johnson
* Corporate worldwide approval from Coca-Cola for new beverage testing
system
* Newly patented enzyme formulation for ATP-based product assays offers
superior detection and at lower cost
Jay LeCoque, Chief Executive Officer of Celsis, commented:
"I am pleased to report another period of excellent Group performance at this
year's Interims. Profits are up 21.6% on expanding revenue growth during this
period of continued economic uncertainty. Our Product Group continues to
provide rapid growth in all market segments. Our Laboratory Group is recovering
from a brief slow down in our major pharmaceutical customer's spending but ended
the half positively."
"Our focus on delivering customers with the highest quality products and
analytical services combined with superior technical support and customer
service continues to define Celsis as the leading supplier in our respective
industries. We remain confident in our ability to maintain healthy business
expansion and achieve sustained earnings growth."
29 October 2003
ENQUIRIES:
Celsis International plc Tel: 01638 600 151
Jay LeCoque, Chief Executive Officer Today: 020 7457 2020
Christian Madrolle, Finance Director Today: 020 7457 2020
College Hill Tel: 020 7457 2020
Nicholas Nelson/Corinna Dorward
Chairman's & Chief Executive's Review
This half-year has been one of consolidating our leadership position for both
the Product and Laboratory Groups. The Product Group continues to expand its
presence into the leading global manufacturers of pharmaceutical, personal care,
dairy and beverage products. Our rapid diagnostic products are increasingly
becoming the industry standard for end product screening for manufacturers in
our respective industries. Rapid detection of potential microbial
contaminations is an inherent need of 21st century supply chain management and
Celsis is uniquely positioned to partner with our growing list of customers to
meet these needs on a global basis.
Our Laboratory Group is in the final stages of implementing NuGenesis, a new
paperless scientific data management system. NuGenesis will provide our
customers with a significantly enhanced, web enabled customer interface,
allowing secure retrieval of current and historical testing data generated from
our Laboratory Group and will also result in increased internal operational
efficiencies. We are also insuring that every Laboratory Group employee has
undergone the Philip Crosby Quality training by the end of this calendar year.
Focus and adherence to zero defect quality and cGMP compliance will underpin
Celsis' leadership position in the market.
We have recently completed a customer satisfaction audit for both the Product
and Laboratory Groups to provide our customers with another avenue to share
their "voice" with Celsis. A statistic of note from our audit results, showed
that 95% of our existing customer respondents have recommended, or would
recommend Celsis to another company looking for the type of products or services
which we provide. This is a very strong endorsement of our customer-focused
approach and we intend to repeat this type of satisfaction audit on a regular
basis to insure that Celsis continues to be aligned with the evolving needs of
our customers.
For the six-month period ended 30 September 2003, we are pleased to report
robust profit growth on expanding revenue. We have continued to build our cash
position from the base business and have successfully placed 5% of our share
capital with new and leading institutional investors. We remain optimistic
toward our future prospects and continued earnings growth.
Financial Review
Total Group Revenue for the 6 months to 30 September 2003 was up 3.5% to $13.48
million (H1 2002: $13.03 million), and up 6.3% after taking into account the
discontinuation of our Laboratory Group's animal toxicology testing unit, which
represented $0.35 million of revenue included in last year's figures.
Gross profit increased 9.2% to $8.69 million (H1 2002: $7.96 million) and the
gross margin increased from 61.1% to 64.4%. This improvement in gross margin is
the result of the continued focus on higher margin business, and the elimination
of low or inexistent net margin activities like animal toxicology testing. Both
our Product and Laboratory Group have benefited from gross margin improvements.
Total overhead increased 7.3% to $6.64 million (H1 2002: $6.19 million) as we
strengthened our sales and marketing management teams in both the Product and
Laboratory Groups.
Operating profit increased 15.9% to $2.05 million (H1 2002: $1.77 million) and
profit before tax increased 21.6% to $2.14 million (2002: $1.76 million).
For the 6-month period, we recognised $0.63 million of deferred tax assets. The
Company continues to recognise deferred tax assets as and when their recovery is
likely.
Retained profit for the period has increased 58.3% to $2.77 million (H1 2002:
$1.75 million) and Earnings per share are up 56.7% to 2.6c (H1 2002: 1.6c) and
diluted earnings per share are up 55.5% to 2.6c (H1 2002: 1.6c).
Total Group capital expenditure is up to $0.77 million (H1 2002: $0.29 million).
The total Laboratory Group investment including leasehold improvements, new
laboratory equipment, and NuGenesis software amounted to $0.51 million for the
period. NuGenesis is a new fully integrated scientific data management
software, which is FDA 21 CFR part 11 compliant, and has been implemented into
both the Saint Louis and New Jersey laboratories, allowing our Laboratory Group
to acquire a significant competitive edge particularly as far as large
pharmaceutical companies are concerned.
Stocks are down 16.7% to $2.97 million (H1 2002: $3.57 million) as we have
continued our inventory and supply chain management improvement process across
the total Group.
Debtors include $1.85 million of deferred tax assets and trade debtors are at
$5.51 million (H1 2002: $5.20 million). Creditors and provisions have increased
slightly to $3.53 million (H1 2002 : $3.32 million) and we currently have no
long-term debt or usage of bank overdrafts. Our creditors/cash ratio (acid test
ratio) has continued to improve to 0.31 (2002: 0.73).
Our total cash position including cash and cash equivalents has continued to
improve substantially to $11.44 million (H1 2002: $3.75 million). To meet
institutional investor demand, Celsis issued 5,349,300 new ordinary shares at
29.5p per share in August 2003, via a Placing by the Company's broker, Seymour
Pierce Limited, raising $2.44 million. The Placing of shares represents 5% of
the enlarged issued share capital of the Company.
Equity shareholders' funds have increased 58.7% to $23.92 million (H1 2002:
$15.07 million, H2 2002: $18.58 million), with $6.44 million resulting from our
trading activities and $2.44 million from our share capital increase as stated
above.
Net cash inflow has substantially increased to $3.29 million for the 6-month
period versus $1.63 million during the comparable period last year and $5.07
million for the full year.
The working capital has decreased $0.6 million during the period, mainly due to
debtors and stock contraction, and the tight management of current assets has
produced a useful contribution to the net cash inflow.
Progress has continued across the Group during the period under review,
profitability is solid in all our core activities, cost control measures
continue and risk management issues are carefully monitored. The Group is well
positioned to pursue its organic and external development, while continuing to
deliver increased shareholder value in the coming years.
Product Group
The Product Group, which now represents 50% of Group revenues, increased
strongly by 17.8% to $6.70 million (H1 2002: $5.69 million) and is ahead of
plan. This was mainly due to our Personal Care and Pharma sector increasing 21%
and our European Dairy sector improving 10%, compared to the same period last
year.
We have seen a strengthening of business in the Personal Care and Pharma sectors
across all regions, which is indicative of the continuing global acceptance and
expansion of Celsis technology within our key industries. Our Global Corporate
Account Management (GCAM) programme remains the key strategic sales platform to
drive the continued global implementation of Celsis testing in any country where
our customers require the benefits of our rapid microbial screening systems.
Having previously announced our preferred supplier agreement with
GlaxoSmithKline in July of this half, we are also pleased that our recent GCAM
activities have secured agreements from both Procter & Gamble and Johnson &
Johnson to adopt our new AK testing system. On the beverage front, we secured
corporate worldwide approval from Coca-Cola for our new beverage testing system
and are currently working with several other leading beverage companies to
implement our rapid testing systems.
Celsis' market position in the European Dairy sector is now much stronger, as we
have started to realise the success of ConCell acquisition through increased
market share across the region. The customer-focused approach of the new
European dairy team, combined with our new instrument platform(s) and improved
reagent sensitivity now provide Celsis with the leading testing platform in the
Dairy industry.
We continue to improve our reagent technology and have launched several new
higher sensitivity reagent kits across our market segments. Under the R&D
leadership of ConCell founder Veikko Tarkkanen, we recently placed a pending
patent on a new ATP-based reagent system that significantly improves the
sensitivity of our testing kits. This new reagent system will provide Celsis a
significant advantage over any known competitor in basic ATP detection for
finished product testing.
Combining this new patented ATP reagent system with our continued focus and
development of our Adenlyate Kinase (AK) reagent systems means that Celsis will
continue to offer superior products across its the breadth of our product line.
Celsis has an exclusive AK license for finished product testing from the Defence
and Scientific Testing Laboratories (Dstl) division of the UK Ministry of
Defence, which we are continuing to use to develop more rapid detection systems
utilizing AK technology.
Laboratory Group
Our Laboratory Group, which represents 50% of Group revenues, delivered a modest
decline (3%) to $6.78 million (H1 2002: $6.98 million) following a slowdown in
our pharmaceutical customers' spending in the earlier portion of this first
half. Sample receipts picked up strongly in the latter portion of the half and
into October, and we are confident that the situation was temporary and is
correcting.
Our Laboratory Group management team has recently been refocused toward the
customer with a new Chemical Sciences Division and a new Biological Sciences
Division, both with operations across our two locations (vs previous management
of two separate locations with overlapping efforts and services). This new
structure provides for one set of quality standards, one set of audit
procedures, and one set of compliance documentation that is managed by one
management team across our two locations. This new "services first" specialist
focus combined with the Philip Crosby Quality and renewed cGMP compliance
training will better enable our Laboratory Group to manage more effectively the
growth of these two rapidly growing and higher margin analytical service
sectors.
Our business development and client service functions have been combined and are
now being managed as a team. This new customer focused team is pro-active in
providing a higher level of client technical support and express service, and
has been very well received by our customers. We have also added a dedicated
business development resource to Puerto Rico, where we have recently seen an
untapped market for high quality analytical services to the large pharmaceutical
manufacturing customer base located on this island.
Lastly, we completed our exit from our lower margin animal testing services and
converted these premises into a new higher margin in-vitro toxicology services
laboratory. The recent EU ban of animal testing in addition to the overall
decline in this service as a percentage of our overall Laboratory Group revenues
meant that the disruption to our business was minimised. We are confident that
our new focus on in-vitro toxicology testing places Celsis in the lead with
respect to ethical testing procedures and will provide superior business growth
and returns in the near future.
Outlook
We are pleased with our first half results and remain confident in securing a
strong year-end with our long-term vision keenly focused on delivering further
earnings growth. We remain aware of undervalued business opportunities that
could benefit from the synergies that Celsis can provide and we will continue to
consider only such opportunities that allow us to continue our pace of building
solid profits and shareholder value.
The market for Celsis' existing products and analytical services continues to
expand and we have demonstrated the ability to grow this business at a vigorous
pace while keeping costs in line with our business development needs. We are
grateful to all of our employees for their individual contributions toward
making this first half a success, and we thank you, our new and existing
shareholders for your confidence and support of Celsis.
Jay LeCoque, Chief Executive Officer
Jack Rowell, Non-Executive Chairman
Unaudited Consolidated Profit and Loss Account
for the 6 months to 30 September 2003
Total Total Total
$'000 Six months Six months Year
to 30 Sept to 30 Sept to 31 March
2003 2002 2003
Notes Unaudited Audited
Turnover 13,479 13,025 27,107
Cost of Sales (4,792) (5,061) (10,445)
Gross profit 8,687 7,964 16,662
Overheads
Sales & marketing expenses (4,623) (4,235) (9,191)
Administrative expenses (1,568) (1,498) (2,604)
Research & development expenditure (445) (461) (891)
Operating profit 2,051 1,770 3,976
Interest receivable & similar income 99 99 97
Interest payable (9) (108) (133)
Profit before taxation 2,141 1,761 3,940
Taxation 632 (8) 1,220
Retained profit for the period 2,773 1,753 5,160
Earnings per Ordinary Share
Earnings per Ordinary Share 1 2.57c 1.64c 4.82c
Diluted earnings per share 1 2.55c 1.64c 4.82c
Statement of Total Group Recognised Gains and Losses
for the 6 months to 30 September 2003
Profit for the financial period 2,773 1,753 5,160
Currency translation differences on
foreign currency net investments 126 333 435
Total profit recognised since
last annual report 2,899 2,086 5,595
Unaudited Consolidated Balance Sheet
at 30 September 2003
$'000 At 30 Sept At 30 Sept At 31 March
2003 2002 2003
Notes Unaudited Audited
Fixed Assets
Intangible assets 1,356 1,596 1,403
Tangible assets 4,128 4,022 3,889
Investments 12 6 11
5,496 5,624 5,303
Current Assets
Stocks 2,974 3,571 3,088
Debtors : amounts falling due after one year 163 244 150
Debtors : amounts falling due within one year 7,368 5,201 7,249
Short-term investments 9,370 - 4,896
Cash at bank and in hand 2,072 3,752 1,653
21,947 12,768 17,036
Creditors - due within one year (3,173) (2,738) (3,310)
Net Current Assets 18,774 10,030 13,726
Total Assets less Current Liabilities 24,270 15,654 19,029
Creditors - due after more than one year (279) (373) (349)
Provision for liabilities and charges (72) (212) (102)
Net Assets 23,919 15,069 18,578
Capital and Reserves:
Called up share capital 1,611 1,525 1,525
Share premium account 23,097 20,741 20,741
Profit and loss account 5 (2,271) (8,679) (5,170)
Reserve arising on consolidation 1,482 1,482 1,482
Equity shareholders' funds 23,919 15,069 18,578
Unaudited Cashflow Statement
for the 6 months to 30 September 2003
$'000 Six months Six months Year
to 30 Sept to 30 Sept to 31 March
2003 2002 2003
Unaudited Audited
Net cash inflow from operating activities 3,286 1,627 5,072
Returns on investments and servicing of finance
Interest received 99 99 97
Interest paid (9) (108) (133)
Net cash (outflow)/inflow from returns on investments
and servicing of finance 90 (9) (36)
Taxation
Corporation tax paid (35) (8) (25)
(35) (8) (25)
Capital expenditure and financial investment
Purchase of tangible fixed assets (773) (294) (611)
Sale of tangible fixed assets - -
Purchase of intangible fixed assets - -
Net cash (outflow)/inflow from returns on investment (773) (294) (611)
and capital expenditure
Acquisitions
Purchase of subsidiary undertaking (less cash acquired) - - -
Cash inflow/(outflow) before financing 2,568 1,316 4,400
Management of liquid resources
Purchase of short-term investments (4,476) - (4,896)
- - -
Issue of shares - - -
Financing
Issue of sharesProceeds from share options exercised 2,442 - -
Proceeds from share options exercised - - -
Repayment of principal under finance leases (79) (105) (215)
Repayment of loan principalRRepayment of loan principal - - -
Net cash (outflow) from financing 2,363 (105) (215)
Increase/(decrease) in cash in the period 455 1,211 (711)
Notes
for the 6 months to 30 September 2003
1. Basic & diluted profit per ordinary share
$'000 Six months Six months Year
to 30 Sept to 30 Sept to 31 March
2003 2002 2003
Unaudited Audited
Profit on ordinary activities after taxation $2,773,000 $1,753,000 $5,160,000
Basic weighted average number of Ordinary Shares in issue 108,009,008 106,946,566 106,946,566
Diluted weighted average number of Ordinary Share in issue 108,634,163 107,116,812 107,116,812
2. Reconciliation of operating profit to net cash inflow from operating activities
Operating profit 2,051 1,770 3,976
Depreciation of tangible fixed assets 586 572 1,156
Provision for reduction in valuation of shares held by ESOT 1 - (5)
Amortisation of intangible assets 52 49 101
Loss on disposal of tangible fixed assets - - 6
Decrease in debtors 719 1,154 185
Decrease in stocks 114 368 532
(Decrease)/increase in trade & other creditors (207) (1,324) 83
Movement in provisions (30) (962) (962)
Net cash inflow from continuing operating activities 3,286 1,627 5,072
3. Reconciliation of net cash flow to movement in net funds
Increase/(decrease) in cash in the period 455 1,211 (711)
Purchase of short-term investments 4,476 - 4,896
Repayment of finance lease and loan obligations 79 105 215
Changes in net funds resulting from cashflows 5,010 1,316 4,400
New finance leases - (31) (68)
Exchange adjustment - 240 28
Movement in net funds in the period 5,010 1,525 4,360
Net funds at the beginning of the period 6,103 1,743 1,743
Funds at the end of the period 11,113 3,268 6,103
4. Analysis of net funds
$'000 At start of Cashflow Non-cash Exchange At end of
period changes differences period
Six months ended 30 September 2003
Cash at bank and in hand 1,653 417 - - 2,070
Short-term investments 4,896 4,476 - - 9,372
Bank overdrafts (35) 35 - - -
Loans -
Finance leases (411) 82 - - (329)
6,103 5,010 - - 11,113
Six months ended 30 September 2002
Cash at bank and in hand 2,549 937 - 266 3,752
Bank overdrafts (248) 274 - (26) -
Finance leases (558) 105 (31) - (484)
Loans - - - - -
1,743 1,316 (31) 240 3,268
Year ended 31 March 2003
Cash at bank and in hand 2,549 (924) - 28 1,653
Short-term investments - 4,896 - - 4,896
Loans -
Bank overdrafts (248) 213 - - (35)
Finance leases (558) 215 (68) - (411)
1,743 4,400 (68) 28 6,103
5. Profit and loss account
Six months Six months Year
to 30 Sept to 30 Sept to 31 March
2003 2002 2003
At 1 April (5,170) (10,765) (10,765)
Retained profit for the period 2,773 1,753 5,160
Exchange difference 126 333 435
Loss carried forward (2,271) (8,679) (5,170)
This information is provided by RNS
The company news service from the London Stock Exchange
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